List of Derivatives Articles

Derivatives Market Guide

What is the Difference Between Call and Put Option?

The essential difference between call option and put option arises from the fact that one is an option to buy an underlying asset and the other an option to sell the asset.

What are the Advantages of Futures?

A futures contract is a right and obligation to buy or sell a contract at a future date at a price that is determined and agreed upon today.

Different types of futures contracts

A future contract is a right and an obligation to buy or to sell an asset. Remember when we talk of types of futures contracts, there are futures across asset classes.

What are the risks of futures trading?

A futures is a contract to buy or sell an underlying asset at a future price, called the exercise price, at a future date, called the expiry date.

What are Currency Options?

Currency options are a low upfront cost method of participating in the currency derivatives market. Like currency futures, currency options are also available on pairs like the USDINR, EURINR, GBPINR etc.

What are Commodity Options?

Commodity options are structured like any other option on an index or stock in that the buyer has limited risk and the seller of the option has unlimited risk.

Difference Between Option Buyer and Option Writer?

We know that an option in financial parlance is the right to buy or sell an asset without the obligation. For this right without the obligation, the buyer of the option pays a price which is called the options price or the option premium.

What is the cost of carrying?

The cost of carry model is based on the premise that the futures price of an asset is the spot price plus the cost of carrying. This cost of carrying is an absolute number but the cost of carrying model presents it in percentage terms.

What is premium in Derivatives?

We all pay option premium when we buy options and receive option premium when we sell options. Have you wondered about the option premium meaning and its significance. Why do options command premium, what exactly this premium and who determines this premium amount?

What are Naked Options?

when you hold naked options, you actually hold an option without holding the underlying security or the commodity.